The latest data on inflation indicate its return to the levels of previous years

Максим Петроневич, банк «Открытие» 22 July 2021 15:08

Last week, consumer prices stabilized, and a week earlier, their average daily growth slowed sharply to less than 0.01%. The slowdown compared to the beginning of the year is certainly due to seasonal factors. However, for the first time in 2021, for two consecutive weeks, inflation is below the levels of the comparable weeks of 2017-2020, and this may be the first signal of a slowdown in the current price growth to the levels of previous years. In part, the sharp decline is due to a decrease in prices for travel packages in Turkey, which were promptly included in the basket for calculating weekly inflation from July 2021 after a strong rise in price since June, but even with the exclusion of their influence, the trend of a sharp slowdown to normal levels is noticeable.

If prices stabilize during the third decade of July, then the growth of consumer prices for the month can be compared with the indicator of a year ago. This will happen for the first time since June 2020, with the exception of only April 2021, when the high growth of 0.6% mom was slightly lower than the even higher values in April 2020 – then the price increase was 0.8% mom.

The slowdown in inflation reduces the likelihood of a significant increase in the key rate at tomorrow's meeting of the Bank of Russia. Under these conditions, the regulator may decide to continue monitoring price dynamics and postpone the transition of the key rate to the area of moderately tight values until the next meeting in September.

Maxim Petronevich, senior economist of the analytical department "Otkritie Research".

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